Netherlands investment firms warn of financial bubble risk

By Janene Pieters on April 26, 2016 - 11:25

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There is a risk of a new financial bubble due to the low interest rates, the Dutch association of investment companies NVP warns.

Because of the low interest rates, investors are increasingly opting for private equity in an effort to still get a favorable return. This ensures inflated prices. "A lot of capital is raised world wide, including in countries around us. And there is of course always a risk in that", NVP director Tjarda Molenaar said. "The competition to invest in the best companies in the market is increasing, thereby increasing prices."

The SP believes that the European Central Bank is to blame for this new threatening financial bubble. Not only does the ECB keep the interest rate low, but the bank also pumps tens of billions of euros into the financial sector on a monthly basis, MP Arnold Merkies said to broadcaster BNR.

"What they're doing is causing instability", Merkies said. He is calling for the ECB to address the problem. "We have to realize that the ECB has this influence and that it is indeed political."